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New Guy Question => Difference between Buy Ask and Buy Bid?
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New Guy Question => Difference between Buy Ask and Buy Bid?

  #1 (permalink)
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New Guy Question => Difference between Buy Ask and Buy Bid?

I am so new i am still drying behind my ears. Can someone please please,,,, please explain to me the difference between Buy Ask and Buy Bid? I assume it is the same just "short" for Sell Ask and Sell Bid as apposed to "long"?

I would be so very grateful.

Cheers.

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  #2 (permalink)
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Financial Dictionary | Investopedia


a good start.

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Cisco View Post
I am so new i am still drying behind my ears. Can someone please please,,,, please explain to me the difference between Buy Ask and Buy Bid? I assume it is the same just "short" for Sell Ask and Sell Bid as apposed to "long"?

I would be so very grateful.

Cheers.

If you are referring to "BUY ASK" and "BUY BID" buttons in NinjaTrader this means that a Limit order to buy is placed at either the ASK price or BID price.

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Buy ask faster fill

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@Cisco

On the Super Doms, you see the bid and ask prices in bold. By default the ask is dark green and the bid is dark blue. Sellers are always "ASKING" for higher prices, buyers are always "BIDDING" for lower prices.

It has been my experience using Ninja, that whenever I hit the buy ask button, it means I will pay whatever is the lowest price someone will accept (what they are asking for) at that moment. I get a usually quick fill (in active markets) because I am willing to pay more. This button does, however, enter a limit order, and you do go to the back of the queue at that current ask price. If prices move up fast, you may not get filled. If price moves lower, you will be filled. You always get filled faster than when you submit a buy bid offer.

When I hit the buy bid button, I limit my offer even more. I will pay no more than the current bid. Fills may be slow or maybe the order will languish for a long while. The only way you are guaranteed a fill is if the price trades lower than you price you bid. If prices just hit your limit, you may or may not be filled. The buy bid button enters your order at the end of the queue for that particular price, the highest price someone has bid at that moment. Your order is filled after all the ones ahead of you are filled.

If you want an immediate fill, you can use the method Perry taught in his August 2011 webinar. In active markets, place your cursor 1 tic above the current ask price in the buy column and use a right click on that price. According to what he taught us, this puts you at the front of the queue, albeit at a possible higher price. Sometimes it is more advantageous for you to get in a trade even if pay a little more.


Last edited by sparky; March 12th, 2012 at 12:23 AM.
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cisco

In NinjaTrader, are you using the DOM or Chart Trader interface?

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sparky View Post
It has been my experience using Ninja, that whenever I hit the BUY ASK button, it means I will pay whatever is the lowest price someone will accept (what they are asking for) at that moment. I get a usually quick fill (in active markets) because I am willing to pay more. This button does, however, enter a limit order, and you do go to the back of the queue at that current ask price. If prices move up fast, you may not get filled. If price moves lower, you will be filled. You always get filled faster than when you submit a BUY BID.

While using BUY BID will put you at the back of the buy queue at the lower price, does not the BUY ASK button match you with the first person in the sell queue?

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ddnut View Post
While using BUY BID will put you at the back of the buy queue at the lower price, does not the BUY ASK button match you with the first person in the sell queue?

Hi,

I believe you are correct, with the immediate purchase you are potentially giving up ticks of profit. If there is a trend that is running up strong, this may be the only way to enter a trade is at the Sell price, but my watching of the DOM shows that although there may be a trend, there may be a 1 to 3 tick gap between Bid/Ask and the price jumps between the two as the market is still moving in a direction. It would be nice to have that extra 1 to 3 ticks as profit. Although, you risk not getting in on a strong move in that direction. Just my thoughts, other may have a different perspective.

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sparky View Post
...
If you want an immediate fill, you can use the method Perry taught in his August 2011 webinar. In active markets, place your cursor 1 tic above the current ask price in the buy column and use a right click on that price. According to what he taught us, this puts you at the front of the queue, albeit at a possible higher price. Sometimes it is more advantageous for you to get in a trade even if pay a little more.

I can't use a right click on the DOM. If i do then a contextual menu opens with options. I don't remember Perry mentionning this either. You probably meant a left click. I also think Perry did not make the distinction between the ASK and BID, he just mentionned to click above or below the cell in yellow background color not as you wrote 1 tick above the ASK (text in green) or 1 tick below the BID (text in blue). Here is the chart he posted at that time.

Here is how he described it: post#46 post#581 post#160 post#167

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Last edited by trendisyourfriend; March 14th, 2012 at 02:09 PM.
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I recommend some of you asking these questions to search google books for "trading and exchanges: market microstructure", and read the sample pages 68-88. Understanding the order book, and how prices move, should be relatively near the front of your list of things to understand. Particularly read pages 68-74. These pages will take you no more than 15 to 20 minutes to read, and if you have questions on that material post them here and I will answer them.

To put it briefly:

1) "Buy Bid" places a buy limit order at the inside bid (the highest bid price)
2) "Buy Ask" places a buy limit order at the inside offer (the lowest offer price)
3) "Sell Bid" places a sell limit order at the inside bid (the highest bid price)
4) "Sell Ask" places a sell limit order at the inside offer (the lowest offer price)


Assume the market is 1404.75/1405.00, with 112 biding at 1404.75, and 68 offered at 1405.00.

Assuming there is no change in the inside bid and offer between when the user clicks the button and when the exchange accepts the order, the following will happen:

1) Your order to buy will be placed at the back of the queue for the inside bid. Your 1 contract will be 113th in line to be filled, and if filled, the price will be 1404.75.

2) Your order to buy becomes a "marketable limit order" and you will be filled immediately at 1405.00.

3) Your order to sell becomes a "marketable limit order" and you will be filled immediately at 1404.75.

4) Your order to sell will be placed at the back of the queue for the inside offer. Your 1 contract will be the 69th in line to be filled, and if filled, the price will be 1405.00.

In a less liquid market like CL, for example, imagine the market is 105.05 / 105.07. If you place a buy or sell limit at 105.06, then you will be first in line to be filled at that price. A buy limit would make the market 105.06 / 105.07, and a sell limit would make the market 105.05 / 105.06.

Again, the pages in the book above should be helpful. If you have any questions, ask away.

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